26 CFR 1.6045-5 - Information reporting on payments to attorneys.

Beta! The text on the eCFR tab represents the unofficial eCFR text at ecfr.gov.

§ 1.6045-5 Information reporting on payments to attorneys.

(a)Requirement of reporting -

(1)In general. Except as provided in paragraph (c) of this section, every payor engaged in a trade or business who, in the course of that trade or business, makes payments aggregating $600 or more during a calendar year to an attorney in connection with legal services (whether or not the services are performed for the payor) must file an information return for such payments. The information return must be filed on the form and in the manner required by the Commissioner. For the time and place for filing the form, see § 1.6041-6. For definitions of the terms under this section, see paragraph (d) of this section. The requirements of this paragraph (a)(1) apply whether or not -

(i) A portion of a payment is kept by the attorney as compensation for legal services rendered; or

(ii) Other information returns are required with respect to some or all of a payment under other provisions of the Internal Revenue Code and the regulations thereunder.

(2)Information required. The information return required under paragraph (a)(1) of this section must include the following information:

(i) The name, address, and taxpayer identifying number (TIN) (as defined in section 7701(a)) of the payor;

(ii) The name, address, and TIN of the payee attorney;

(iii) The amount of the payment or payments (as defined in paragraph (d)(5) of this section); and

(iv) Any other information required by the Commissioner in forms, instructions or publications.

(3)Requirement to furnish statement -

(i)General requirements. A person required to file an information return under paragraph (a)(1) of this section must furnish to the attorney a written statement of the information required to be shown on the return. This requirement may be met by furnishing a copy of the return to the attorney. An IRS truncated taxpayer identifying number (TTIN) may be used as the identifying number of the attorney in lieu of the identifying number appearing on the information return filed with the Internal Revenue Service. For provisions relating to the use of TTINs, see § 301.6109-4 of this chapter (Procedure and Administration Regulations). The written statement must be furnished to the attorney on or before February 15 of the year following the calendar year in which the payment was made.

(ii)Consolidated reporting.

(A) The term consolidated reporting statement means a grouping of statements the same payor furnishes to the same payee or group of payees on the same date for the same reporting year that includes a statement required under this section. A consolidated reporting statement is limited to statements based on the same relationship of payor to payee as the statement required to be furnished under this section.

(B) A consolidated reporting statement must be furnished on or before February 15 of the year following the calendar year reported. Any statement that otherwise must be furnished on or before January 31 must be furnished on or before February 15 if it is furnished in the consolidated reporting statement.

(b)Special rules -

(1)Joint or multiple payees -

(i)Check delivered to one payee attorney. If more than one attorney is listed as a payee on a check, an information return must be filed under paragraph (a)(1) of this section with respect to the payee attorney to whom the check is delivered.

(ii)Check delivered to payee nonattorney. If an attorney is listed as a payee on a check but the check is delivered to a nonattorney who is a payee on the check, an information return must be filed under paragraph (a)(1) of this section with respect to the payee attorney listed on the check. If more than one attorney is listed as a payee on a check but the check is delivered to a nonattorney who is a payee on the check, the information return must be filed with respect to the first-listed payee attorney on the check.

(iii)Check delivered to nonpayee. If two or more attorneys are listed as payees on a check, but the check is delivered to a person who is not a payee on the check, an information return must be filed under paragraph (a)(1) of this section with respect to the first-listed payee attorney on the check.

(2)Attorney required to report payments made to other attorneys. If an information return is required to be filed with respect to a payee attorney under paragraph (b)(1) of this section, the attorney with respect to whom the information return is required to be filed (tier-one attorney) must file an information return under this section for any payment that the tier-one attorney makes to other payee attorneys with respect to that check, regardless of whether the tier-one attorney is a payor under paragraph (d)(3) of this section.

(c)Exceptions. Notwithstanding paragraphs (a) and (b) of this section, a return of information is not required under section 6045(f) with respect to the following payments:

(1) Payments of wages or other compensation paid to an attorney by the attorney's employer.

(2) Payments of compensation or profits paid or distributed to its partners by a partnership engaged in providing legal services.

(3) Payments of dividends or corporate earnings and profits paid to its shareholders by a corporation engaged in providing legal services.

(4) Payments made by a person to the extent that the person is required to report with respect to the same payee the payments or portions thereof under section 6041(a) and § 1.6041-1(a) (or would be required to so report the payments or portions thereof but for the dollar amount limitation contained in section 6041(a) and § 1.6041-1(a)).

(5) Payments made to a nonresident alien individual, foreign partnership, or foreign corporation that is not engaged in trade or business within the United States, and does not perform any labor or personal services in the United States, in the taxable year to which the payment relates. For how a payor determines whether a payment is subject to this exception, see § 1.6041-4(a)(1).

(6) Payments made to an attorney in the attorney's capacity as the person responsible for closing a transaction within the meaning of § 1.6045-4(e)(3) for the sale or exchange or financing of any present or future ownership interest in real estate described in § 1.6045-4(b)(2)(i) through (iv).

(7) Payments made to an attorney in the attorney's capacity as a trustee in bankruptcy under title 11, United States Code.

(d)Definitions. The following definitions apply for purposes of this section:

(1)Attorney means a person engaged in the practice of law, whether as a sole proprietorship, partnership, corporation, or joint venture.

(2)Legal services means all services related to, or in support of, the practice of law performed by, or under the supervision of, an attorney.

(3)Payor means a person who makes a payment if that person is an obligor on the payment, or the obligor's insurer or guarantor. For example, a payor includes -

(i) A person who pays a settlement amount to an attorney of a client who has asserted a tort, contract, violation of law, or workers' compensation claim against that person; and

(ii) The person's insurer if the insurer pays the settlement amount to the attorney.

(4)Payments to an attorney include payments by check or other method such as cash, wire or electronic transfer. Payment by check to an attorney means a check on which the attorney is named as a sole, joint, or alternative payee. The attorney is the payee on a check written to the attorney's client trust fund. However, the attorney is not a payee when the attorney's name is included on the payee line as “in care of,” such as a check written to “client c/o attorney,” or if the attorney's name is included on the check in any other manner that does not give the attorney the right to negotiate the check.

(5)Amount of the payment means the amount tendered (e.g., the amount of a check) plus the amount required to be withheld from the payment under section 3406(a)(1), because a condition for withholding exists with respect to the attorney for whom an information return is required to be filed under paragraph (a)(1) of this section.

(e)Attorney to furnish TIN. A payor that is required to file an information return under this section must solicit a TIN from the attorney at or before the time the payor makes a payment to the attorney. The attorney must furnish the correct TIN to the payor, but is not required to certify the TIN. A payment for which a return of information is required under this section is subject to backup withholding under section 3406 and the regulations thereunder.

(f)Examples. The following examples illustrate the provisions of this section. The examples assume that P is not a payor with respect to A, the attorney, under section 6041. See section 6041 and the regulations thereunder for rules regarding whether P is required under section 6041 to file information returns with respect to C. The examples are as follows:

Example 1. One check - joint payees - taxable to claimant.

Employee C, who sues employer P for back wages, is represented by attorney A. P settles the suit for $300,000. The $300,000 represents taxable wages to C under existing legal principles. P writes a settlement check payable jointly to C and A in the amount of $200,000, net of income and FICA tax withholding with respect to C. P delivers the check to A. A retains $100,000 of the payment as compensation for legal services and disburses the remaining $100,000 to C. P must file an information return with respect to A for $200,000 under paragraph (a)(1) of this section. P also must file an information return with respect to C under sections 6041 and 6051, in the amount of $300,000. See §§ 1.6041-1(f) and 1.6041-2.

Example 2. One check - joint payees - excludable to claimant.

C, who sues corporation P for damages on account of personal physical injuries, is represented by attorney A. P settles the suit for a $300,000 damage payment that is excludable from C's gross income under section 104(a)(2). P writes a $300,000 settlement check payable jointly to C and A and delivers the check to A. A retains $120,000 of the payment as compensation for legal services and remits the remaining $180,000 to C. P must file an information return with respect to A for $300,000 under paragraph (a)(1) of this section. P does not file an information return with respect to tax-free damages paid to C.

Example 3. Separate checks - taxable to claimant.

C, an individual plaintiff in a suit for lost profits against corporation P, is represented by attorney A. P settles the suit for $300,000, all of which will be includible in C's gross income. A requests P to write two checks, one payable to A in the amount of $100,000 as compensation for legal services and the other payable to C in the amount of $200,000. P writes the checks in accordance with A's instructions and delivers both checks to A. P must file an information return with respect to A for $100,000 under paragraph (a)(1) of this section. Pursuant to § 1.6041-1(a) and (f), P must file an information return with respect to C for the $300,000.

Example 4. Check made payable to claimant, but delivered to nonpayee attorney.

Corporation P is a defendant in a suit for damages in which C, the plaintiff, has been represented by attorney A throughout the proceeding. P settles the suit for $300,000. Pursuant to a request by A, P writes the $300,000 settlement check payable solely to C and delivers it to A at A's office. P is not required to file an information return under paragraph (a)(1) of this section with respect to A, because there is no payment to an attorney within the meaning of paragraph (d)(4) of this section.

Example 5. Multiple attorneys listed as payees.

Corporation P, a defendant, settles a lost profits suit brought by C for $300,000 by issuing a check naming C's attorneys, Y, A, and Z, as payees in that order. Y, A, and Z do not belong to the same law firm. P delivers the payment to A's office. A deposits the check proceeds into a trust account and makes payments by separate checks to Y of $30,000 and to Z of $15,000, as compensation for legal services, pursuant to authorization from C to pay these amounts. A also makes a payment by check of $155,000 to C. A retains $100,000 as compensation for legal services. P must file an information return for $300,000 with respect to A under paragraphs (a)(1) and (b)(1)(i) of this section. A, in turn, must file information returns with respect to Y of $30,000 and to Z of $15,000 under paragraphs (a)(1) and (b)(2) of this section because A is not required to file information returns under section 6041 with respect to A's payments to Y and Z because A's role in making the payments to Y and Z is merely ministerial. See § 1.6041-1(e)(1), (e)(2) and (e)(5) Example 7 for information reporting requirements with respect to A's payments to Y and Z. As described in Example 3, P must also file an information return with respect to C, pursuant to § 1.6041-1(a) and (f).

Example 6. Amount of the payment - attorney does not provide TIN.

(i) Corporation P, a defendant, settles a suit brought by C for $300,000 of damages. P will pay the damages by a joint check to C and his attorney, A. A failed to furnish P with A's TIN. P is required to deduct and withhold 28 percent tax from the $300,000 under section 3406(a)(1)(A) and paragraph (e) of this section. P writes the check to C and A as joint payees, in the amount of $216,000. P also must file an information return with respect to A under paragraph (a)(1) of this section in the amount of $300,000, as prescribed in paragraph (d)(5) of this section. If the damages are reportable under section 6041 because they are not excludable from gross income under existing legal principles, and are not subject to any exception under section 6041, P must also file an information return with respect to C pursuant to § 1.6041-1(a) and (f) in the amount of $300,000.

(ii) Rather than paying by joint check to C and A, P will pay the damages by a joint check to C and F, A's law firm. F failed to furnish its TIN to P. P is required to deduct and withhold 28 percent tax from the $300,000 under section 3406(a)(1)(A) and paragraph (e) of this section. P writes the check to C and F as joint payees, in the amount of $216,000. P also must file an information return with respect to F under paragraph (a)(1) of this section in the amount of $300,000, as prescribed in paragraph (d)(5) of this section. If the damages are reportable under section 6041 because they are not excludable from gross income under existing legal principles, and are not subject to any exception under section 6041, P must also file an information return with respect to C pursuant to § 1.6041-1(a) and (f) in the amount of $300,000.

Example 7. Home mortgage lending transaction.

(i) Individual P agrees to purchase a house that P will use solely as a residence. P obtains a loan from lender L to finance a portion of the cost of acquiring the house. L disburses loan proceeds of $300,000 to attorney A, who is the settlement agent, by a check naming A as the sole payee. A, in turn, writes checks from the loan proceeds and from other funds provided by P to the persons involved in the purchase of the house, including a check for $800 to attorney B, whom P hired to provide P with legal services relating to the closing.

(ii) P, not L, is the payor of the payment to A under paragraph (d)(3) of this section. P, however, is not required to file an information return with respect to A under paragraph (a)(1) of this section because the payment was not made in the course of P's trade or business. Even if P made the payment in the course of P's trade or business, P would not be required to file an information return under section 6045(f) with respect to A because P is excepted under paragraph (c)(6) of this section.

(iii) A is not required to file an information return under paragraph (a)(1) of this section with respect to the payment to B because A is not the payor as that term is defined under paragraph (d)(3) of this section. A is not required to file an information return under paragraph (b)(2) with respect to the payment to B because A was listed as sole payee on the check it received from P. See section 6041 and § 1.6041-1(e) for whether A or L must file information returns under that section. See section 6045(e) and § 1.6045-4 for whether A is required to file an information return under that section.

Example 8. Business mortgage lending transaction.

The facts are the same as in Example 7 except that P buys real property that P will use in a trade or business. P, not L, is the payor of the payment to A under paragraph (d)(3) of this section. P, however, is not required to file an information return under section 6045(f) with respect to A because P is excepted under paragraph (c)(6) of this section. A is not required to file an information return under paragraphs (a) or (b)(2) of this section with respect to the payment to B. See section 6041 and § 1.6041-1(e) to determine whether P or L must file an information return under that section with respect to the payment to A, and whether P or A must file a return with respect to the payment to B. See section 6045(e) for rules regarding whether A is required to file information returns under that section.

Example 9. Qualified settlement fund.

Corporation P agrees to settle for $300,000 a class action lawsuit brought by attorney A on behalf of a claimant class. Pursuant to the settlement agreement and a preliminary order of approval by a court, A establishes a bank account in the name of Q Settlement Fund, which is a qualified settlement fund (QSF) under § 1.468B-1. A is also designated by the court as the administrator of the QSF. Corporation P transfers $300,000 by wire in Year 1 to A, who deposits the funds into the Q Settlement Fund. In Year 2, the court approves an award of attorney's fees of $105,000 for A. In Year 2, Q Settlement Fund delivers $105,000 to A. P is required to file an information return under paragraph (a) of this section with respect to A for Year 1 for the $300,000 payment it made to A. The Q Settlement Fund is required to file an information return under section 6041(a) and § 1.468B-2(l)(2) with respect to A for Year 2 for the $105,000 payment it made to A.

(g)Cross reference to penalties. See the following sections regarding penalties for failure to comply with the requirements of section 6045(f) and this section:

(1) Section 6721 for failure to file a correct information return.

(2) Section 6722 for failure to furnish a correct payee statement.

(3) Section 6723 for failure to comply with other information reporting requirements (including the requirement to furnish a TIN).

(h)Effective/applicability date. The rules in this section apply to payments made on or after January 1, 2007. The amendments to paragraph (a)(3)(i) apply to payee statements due after December 31, 2014. For payee statements due before January 1, 2015, § 1.6045-5(a)(3)(i) (as contained in 26 CFR part 1, revised April 2013) shall apply.

Effective date: These regulations are effective on December 7, 2016. Applicability dates: For dates of applicability, see §§ 1.901(m)-1T(b), 1.901(m)-2T(f), 1.901(m)-4T(g), 1.901(m)-5T(i), and 1.901(m)-6T(d).

26 CFR Part 1

Summary

This document contains temporary Income Tax Regulations under section 901(m) of the Internal Revenue Code (Code) with respect to transactions that generally are treated as asset acquisitions for U.S. income tax purposes and either are treated as stock acquisitions or are disregarded for foreign income tax purposes. These regulations are necessary to provide guidance on applying section 901(m). The text of the temporary regulations also serves in part as the text of the proposed regulations under section 901(m) (REG-129128-14) published in the Proposed Rules section of this issue of the Federal Register .

Notice of proposed rulemaking by cross-reference in part to temporary regulations.

Comments and requests for a public hearing must be received by March 7, 2017.

26 CFR Part 1

Summary

This document contains proposed Income Tax Regulations under section 901(m) of the Internal Revenue Code (Code) with respect to transactions that generally are treated as asset acquisitions for U.S. income tax purposes and either are treated as stock acquisitions or are disregarded for foreign income tax purposes. In the Rules and Regulations section of this issue of the Federal Register, temporary regulations are being issued under section 901(m) (the temporary regulations), the text of which serves as the text of a portion of these proposed regulations. These regulations are necessary to provide guidance on applying section 901(m). These regulations affect taxpayers claiming foreign tax credits.

Effective Date: These regulations are effective on December 5, 2016. Applicability Date: For dates of applicability, see § 1.6695-2T(e).

26 CFR Parts 1 and 602

Summary

This document contains temporary regulations that modify existing regulations related to the penalty under section 6695(g) of the Internal Revenue Code (Code) relating to tax return preparer due diligence. These temporary regulations implement recent law changes that expand the tax return preparer due diligence penalty under section 6695(g) so that it applies to the child tax credit (CTC), additional child tax credit (ACTC), and the American Opportunity Tax Credit (AOTC), in addition to the earned income credit (EIC). The temporary regulations affect tax return preparers. The substance of the temporary regulations is included in the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the Federal Register .

Notice of proposed rulemaking by cross-reference to temporary regulations.

Written or electronic comments and requests for a public hearing must be received by March 6, 2017.

26 CFR Part 1

Summary

In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations that will modify the existing regulations related to the penalty under section 6695(g) of the Internal Revenue Code (Code) relating to tax return preparer due diligence. The temporary regulations implement recent law changes that expand the tax return preparer due diligence penalty under section 6695(g) so that it applies to the child tax credit (CTC), additional child tax credit (ACTC), and the American Opportunity Tax Credit (AOTC), in addition to the earned income credit (EIC). The text of those regulations also serves as the text of these proposed regulations.

Effective Date. These regulations are effective on December 2, 2016. Applicability Dates: For date of applicability, see § 1.6035-2(b).

26 CFR Part 1

Summary

This document contains final regulations that provide transition rules providing that executors and other persons required to file or furnish a statement under section 6035(a)(1) or (2) regarding the value of property included in a decedent's gross estate for federal estate tax purposes before June 30, 2016, need not have done so until June 30, 2016. These final regulations are applicable to executors and other persons who file federal estate tax returns required by section 6018(a) or (b) after July 31, 2015.

Comments and requests for a public hearing must be received by February 27, 2017.

26 CFR Part 1

Summary

This document contains proposed regulations that relate to the establishment of dollar-value last-in, first-out (LIFO) inventory pools by certain taxpayers that use the inventory price index computation (IPIC) pooling method. The proposed regulations provide rules regarding the proper pooling of manufactured or processed goods and wholesale or retail (resale) goods. The proposed regulations would affect taxpayers who use the IPIC pooling method and whose inventory for a trade or business consists of manufactured or processed goods and resale goods.

Written or electronic comments must be received by February 23, 2017. Outlines of topics to be discussed at the public hearing scheduled for March 7, 2017, must be received by February 23, 2017.

26 CFR Part 1

Summary

This document contains proposed regulations providing guidance relating to the minimum present value requirements applicable to certain defined benefit pension plans. These proposed regulations would provide guidance on changes made by the Pension Protection Act of 2006 and would provide other modifications to these rules as well. These regulations would affect participants, beneficiaries, sponsors, and administrators of defined benefit pension plans. This document also provides a notice of a public hearing on these proposed regulations.

Written and electronic comments and requests for a public hearing must be received by February 21, 2017.

26 CFR Part 1

Summary

This document contains proposed regulations relating to the application of section 514(c)(9)(E) of the Internal Revenue Code (Code) to partnerships that hold debt-financed real property and have one or more (but not all) qualified tax-exempt organization partners within the meaning of section 514(c)(9)(C). The proposed regulations amend the current regulations under section 514(c)(9)(E) to allow certain allocations resulting from specified common business practices to comply with the rules under section 514(c)(9)(E). These regulations affect partnerships with qualified tax-exempt organization partners and their partners.

This correction is effective November 17, 2016 and is applicable on and after January 3, 2017.

26 CFR Part 1

Summary

This document contains corrections to final and temporary regulations (TD 9788) that were published in the Federal Register on Wednesday, October 5, 2016 (81 FR 69282). The final and temporary regulations provide rules concerning how liabilities are allocated for purposes of section 707 of the Internal Revenue Code and when certain obligations are recognized for purposes of determining whether a liability is a recourse partnership liability under section 752.

This correction is effective November 17, 2016 and is applicable on and after January 3, 2017.

26 CFR Part 1

Summary

This document contains corrections to final and temporary regulations (TD 9788) that were published in the Federal Register on Wednesday, October 5, 2016 (81 FR 69282). The final and temporary regulations provide rules concerning how liabilities are allocated for purposes of section 707 of the Internal Revenue Code and when certain obligations are recognized for purposes of determining whether a liability is a recourse partnership liability under section 752.

This correction is effective November 16, 2016 and is applicable on and after October 5, 2016.

26 CFR Part 1

Summary

This document contains corrections to final regulations (TD 9787) that were published in the Federal Register on Wednesday, October 5, 2016 (81 FR 69291). The final regulations are under sections 707 and 752 of the Internal Revenue Code.

Effective Date: These regulations are effective on November 10, 2016. Applicability Date: For dates of applicability, see § 1.6050P-1(h).

26 CFR Part 1

Summary

This document contains final regulations that remove the rule that a deemed discharge of indebtedness for which a Form 1099-C, “Cancellation of Debt,” must be filed occurs at the expiration of a 36-month non-payment testing period. The Treasury Department and the IRS are concerned that the rule creates confusion for taxpayers and does not increase tax compliance by debtors or provide the IRS with valuable third-party information that may be used to ensure taxpayer compliance. The final regulations affect certain financial institutions and governmental entities.

This correction is effective November 3, 2016 and is applicable on or after October 4, 2016.

26 CFR Part 1

Summary

This document contains corrections to final regulations (TD 9786) that were published in the Federal Register on Tuesday, October 4, 2016 (81 FR 68299). The final regulations provided guidance regarding the application of the credit for increasing research activities.

81 FR 76497 - United States Property Held by Controlled Foreign Corporations in Transactions Involving Partnerships; Rents and Royalties Derived in the Active Conduct of a Trade or Business

Effective Date: These regulations are effective on November 3, 2016. Applicability Dates: For dates of applicability, see §§ 1.954-2(i), 1.956-1(g), 1.956-2(h), 1.956-3(d), and 1.956-4(f).

26 CFR Part 1

Summary

This document contains final regulations that provide rules regarding the treatment as United States property of property held by a controlled foreign corporation (CFC) in connection with certain transactions involving partnerships. In addition, the final regulations provide rules for determining whether a CFC is considered to derive rents and royalties in the active conduct of a trade or business for purposes of determining foreign personal holding company income (FPHCI), as well as rules for determining whether a CFC holds United States property as a result of certain related party factoring transactions. This document finalizes proposed regulations, and withdraws temporary regulations, published on September 2, 2015. It also finalizes proposed regulations, and withdraws temporary regulations, published on June 14, 1988. The final regulations affect United States shareholders of CFCs.

81 FR 76542 - United States Property Held by Controlled Foreign Corporations Through Partnerships With Special Allocations

Written or electronic comments and requests for a public hearing must be received by February 1, 2017.

26 CFR Part 1

Summary

This document contains proposed regulations that provide rules regarding the determination of the amount of United States property treated as held by a controlled foreign corporation (CFC) through a partnership. The proposed regulations affect United States shareholders of CFCs.

Sections 1.304-4, 1.956-1(b)(4), 1.956-2(d)(2), and 1.956-3(b)(2)(ii) of proposed rules published in the Federal Register on June 14, 1988, are withdrawn as of November 3, 2016.

26 CFR Part 1

Summary

This document withdraws portions of a notice of proposed rulemaking (INTL-49-86, subsequently converted to REG-209001-86) published in the Federal Register (53 FR 22186) on June 14, 1988, (the 1988 NPRM). The withdrawn portions relate to stock redemptions through related corporations, the application of section 956 to United States property indirectly held by a controlled foreign corporation (CFC), and certain related party factoring transactions, as well as the definition of the term “obligation” for purposes of section 956.

Notice of proposed rulemaking by cross-reference to temporary regulation.

Written or electronic comments and requests for a public hearing must be received by January 19, 2017.

26 CFR Part 1

Summary

The Department of the Treasury (Treasury Department) and the IRS are issuing temporary regulations that affect corporations and partnerships that issue purported indebtedness to related corporations or partnerships in the Rules and Regulations section of this issue of the Federal Register . The temporary regulations provide rules addressing the treatment of instruments issued by partnerships, consolidated groups, and certain transactions involving qualified cash-management arrangements. The text of the temporary regulations also serves as the text of these proposed regulations.

Effective Date: These regulations are effective on October 21, 2016. Applicability Dates: For dates of applicability, see §§ 1.385-1(f), 1.385-2(i), 1.385-3(j), 1.385-3T(k), 1.385-4T(g), and 1.752-2T(l)(4).

26 CFR Part 1

Summary

This document contains final and temporary regulations under section 385 of the Internal Revenue Code (Code) that establish threshold documentation requirements that ordinarily must be satisfied in order for certain related-party interests in a corporation to be treated as indebtedness for federal tax purposes, and treat as stock certain related-party interests that otherwise would be treated as indebtedness for federal tax purposes. The final and temporary regulations generally affect corporations, including those that are partners of certain partnerships, when those corporations or partnerships issue purported indebtedness to related corporations or partnerships.

2016-10-14; vol. 81 # 199 - Friday, October 14, 2016

81 FR 70938 - Election To Take Disaster Loss Deduction for Preceding Year

Effective Date: These regulations are effective October 13, 2016. Applicability Dates: For dates of applicability, see § 1.165-11T(i).

26 CFR Part 1

Summary

This document contains final and temporary regulations relating to the election to accelerate the timing of a loss sustained by a taxpayer attributable to a federally declared disaster. The text of the temporary regulations also serves as the text of the proposed regulations (REG-150992-13) set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the Federal Register .

81 FR 71025 - Election To Take Disaster Loss Deduction for Preceding Year

Notice of Proposed Rulemaking by cross-reference to temporary regulations.

Written or electronic comments and requests for a public hearing must be received by January 12, 2017.

26 CFR Part 1

Summary

In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations under section 165(i) of the Internal Revenue Code (Code) relating to the election to take a disaster loss in the preceding year. The text of those temporary regulations also serves as the text of these proposed regulations. This document also invites comments from the public regarding these proposed regulations.

This correction is effective October 5, 2016 and is applicable on or after August 31, 2016.

26 CFR Part 1

Summary

This document contains corrections to final regulations (TD 9784) that were published in the Federal Register on Wednesday, August 31, 2016 (81 FR 59849). The final regulations that clarify the definition of real property for purposes of real estate investment trust provisions of the Internal Revenue Code (Code).

Effective date: These regulations are effective on October 5, 2016. Applicability dates: For dates of applicability, see §§ 1.707-9T(a)(4) and 1.752-2T(l)(2).

26 CFR Part 1

Summary

This document contains final and temporary regulations concerning how liabilities are allocated for purposes of section 707 of the Internal Revenue Code (Code) and when certain obligations are recognized for purposes of determining whether a liability is a recourse partnership liability under section 752. These regulations affect partnerships and their partners. The text of these temporary regulations serves as part of the text of proposed regulations (REG-122855-15) published in the Proposed Rules section in this issue of the Federal Register .

Effective date: These regulations are effective on October 5, 2016. Comment date: Comments will be accepted until January 3, 2017. Applicability dates: For dates of applicability, see §§ 1.707-9(a)(1) and 1.752-3(d).

26 CFR Part 1

Summary

This document contains final regulations under sections 707 and 752 of the Internal Revenue Code (Code). The final regulations under section 707 provide guidance relating to disguised sales of property to or by a partnership and the final regulations under section 752 provide guidance relating to allocations of excess nonrecourse liabilities of a partnership to partners for disguised sale purposes. The final regulations affect partnerships and their partners.

Partial withdrawal of notice of proposed rulemaking and notice of proposed rulemaking, including by cross reference to temporary regulations.

The notice of proposed rulemaking under sections 707 and 752 that was published in the Federal Register on January 30, 2014 (REG-119305-11, 79 FR 4826), is partially withdrawn as of October 5, 2016. Written or electronic comments and requests for a public hearing must be received by January 3, 2017.

26 CFR Part 1

Summary

This document contains proposed regulations that incorporate the text of related temporary regulations and withdraws a portion of a notice of proposed rulemaking (REG-119305-11) to the extent not adopted by final regulations. This document also contains new proposed regulations addressing when certain obligations to restore a deficit balance in a partner's capital account are disregarded under section 704 of the Internal Revenue Code (Code) and when partnership liabilities are treated as recourse liabilities under section 752. These regulations would affect partnerships and their partners.

Effective date: These regulations are effective on October 4, 2016. Applicability date: For date of applicability see § 1.41-4(e).

26 CFR Part 1

Summary

This document contains final regulations concerning the application of the credit for increasing research activities. These final regulations provide guidance on software that is developed by (or for the benefit of) the taxpayer primarily for internal use by the taxpayer (internal use software). These final regulations also include examples to illustrate the application of the process of experimentation requirement to software. These final regulations will affect taxpayers engaged in research activities involving software.

Written or electronic comments and outlines of topics to be discussed at the public hearing scheduled for December 1, 2016, for the notice of proposed rulemaking at 81 FR 51413, August 4, 2016, are still being accepted and must be received by November 2, 2016.

26 CFR Part 1

Summary

This document contains a correction to a notice of proposed rulemaking (REG-163113-02) that was published in the Federal Register on Thursday, August 4, 2016 (81 FR 51413). The proposed regulations concern the valuation of interests in corporations and partnerships for estate, gift, and generation-skipping transfer tax purposes.

Written or electronic comments and requests for a public hearing must be received by December 27, 2016.

26 CFR Part 1

Summary

This document provides guidance relating to the income test and the asset diversification requirements that are used to determine whether a corporation may qualify as a regulated investment company (RIC) for federal income tax purposes. These proposed regulations provide guidance to corporations that intend to qualify as RICs.

Correction to a notice of proposed rulemaking and notice of public hearing.

Written or electronic comments and request for a public hearing for the notice of proposed rulemaking at 81 FR 50657, August 2, 2016, are still being accepted and must be received by October 31, 2016.

26 CFR Parts 1 and 301

Summary

This document contains corrections to a notice of proposed rulemaking and notice of public hearing (REG-131418-14) that was published in the Federal Register on Tuesday, August 2, 2016 (81 FR 50657). The proposed regulations that revise the rules for reporting qualified tuition and related expenses under section 6050S on a Form 1098-T, “Tuition Statement,” and conforms the regulations to the changes made to section 6050S by the Protecting Americans from Tax Hikes Act of 2015.

This correction is effective on September 23, 2016 and applicable on July 22, 2016.

26 CFR Part 1

Summary

This document contains a correction to temporary regulations (TD 9776) that were published in the Federal Register on July 22, 2016 (81 FR 47701). The temporary regulations provide guidance regarding the income inclusion rules under section 50(d)(5) of the Internal Revenue Code (Code) that are applicable to a lessee of investment credit property when a lessor of such property elects to treat the lessee as having acquired the property.

81 FR 65541 - Method of Accounting for Gains and Losses on Shares in Money Market Funds; Broker Returns With Respect to Sales of Shares in Money Market Funds; Correction

This correction is effective on September 23, 2016 and applicable on July 8, 2016.

26 CFR Part 1

Summary

This document contains a correction to final regulations (TD 9774) that were published in the Federal Register on July 8, 2016 (81 FR 44508). The final regulations provide a simplified method of accounting for gains and losses on shares in money market funds (MMFs). The final regulations also provide guidance regarding information reporting requirements for shares in MMFs.

81 FR 65542 - Requirement To Notify the IRS of Intent To Operate as a Section 501(c)(4) Organization; Correction

This correction is effective on September 23, 2016 and applicable on July 12, 2016.

26 CFR Parts 1 and 602

Summary

This document contains a correction to final and temporary regulations (TD 9775) that were published in the Federal Register on July 12, 2016 (81 FR 45008). The final and temporary regulations are relating to the requirement, added by the Protecting Americans from Tax Hikes Act of 2015, that organizations must notify the IRS of their intent to operate under section 501(c)(4) of the Internal Revenue Code.

This correction is effective September 19, 2016 and is applicable on or after June 30, 2016.

26 CFR Part 1

Summary

This document contains corrections to final regulations (TD 9773) that were published in the Federal Register on Thursday, June 30, 2016 (81 FR 42482). This document contains final regulations that require annual country-by-country reporting by certain United States persons that are the ultimate parent entity of a multinational enterprise group.

Written or electronic comments and requests for a public hearing that were being accepted by September 6, 2016.

26 CFR Parts 1 and 301

Summary

This document contains corrections to a notice of proposed rulemaking (REG-109086-15) published in the Federal Register on Friday, July 8, 2015 (81 FR 44557). The proposed regulations related to the health insurance premium tax credit (premium tax credit) and the individual shared responsibility provision. These proposed regulations affect individuals who enroll in qualified health plans through Health Insurance Exchanges (Exchanges, also called Marketplaces) and claim the premium tax credit, and Exchanges that make qualified health plan available to individuals and employers.

Effective date: These regulations are effective on September 9, 2016. Applicability date: These regulations apply to distributions with annuity starting dates in plan years beginning on or after on or after January 1, 2017. In addition, a taxpayer can elect to apply these regulations with respect to any earlier period.

26 CFR Part 1

Summary

This document contains final regulations providing guidance relating to the minimum present value requirements applicable to certain defined benefit pension plans. These regulations change the regulations regarding the minimum present value requirements for defined benefit plan distributions to permit plans to simplify the treatment of certain optional forms of benefit that are paid partly in the form of an annuity and partly in a single sum or other more accelerated form. These regulations affect participants, beneficiaries, sponsors, and administrators of defined benefit pension plans.

Effective date: These regulations are effective on August 31, 2016. Applicability date: For dates of applicability, see § 1.856-10(h).

26 CFR Part 1

Summary

This document contains final regulations that clarify the definition of real property for purposes of the real estate investment trust provisions of the Internal Revenue Code (Code). These final regulations provide guidance to real estate investment trusts and their shareholders.

This correction is effective August 23, 2016 and applicable July 18, 2016.

26 CFR Part 1

Summary

This document contains corrections to final regulations (TD 9777) that were published in the Federal Register on Monday, July 18, 2016 (81 FR 46582). The final regulations relate to the arbitrage restrictions under section 148 of the Internal Revenue Code applicable to tax-exempt bonds and other tax-advantaged bonds issued by State and local governments.

This correction is effective August 23, 2016 and applicable July 18, 2016.

26 CFR Part 1

Summary

This document contains corrections to final regulations (TD 9777) that were published in the Federal Register on Monday, July 18, 2016 (81 FR 46582). The final regulations relate to the arbitrage restrictions under section 148 of the Internal Revenue Code applicable to tax-exempt bonds and other tax-advantaged bonds issued by State and local governments.

Effective Date: These regulations are effective on August 18, 2016. Applicability Date: For dates of applicability, see § 1.5000C-7 and § 301.6114-1(e)(2).

26 CFR Parts 1, 301, and 602

Summary

This document contains final regulations under section 5000C of the Internal Revenue Code relating to the 2 percent tax on payments made by the U.S. government to foreign persons pursuant to certain contracts. The regulations affect U.S. government acquiring agencies and foreign persons providing certain goods or services to the U.S. government pursuant to a contract. This document also contains final regulations under section 6114, with respect to foreign persons claiming an exemption from the 2 percent tax under an income tax treaty.

Correction to a partial withdrawal of notice of proposed rulemaking; notice of proposed rulemaking.

Written or electronic comments and requests for a public hearing for the notice of proposed rulemaking published at 81 FR 40569, June 22, 2016 are still being accepted and must be received by September 20, 2016.

26 CFR Part 1

Summary

This document contains corrections to a partial withdrawal of notice of proposed rulemaking; notice of proposed rulemaking (REG-123854-12) that was published in the Federal Register on Wednesday, June 22, 2016 (81 FR 40569). The proposed regulations are to clarify or modify certain specific provisions of the final regulations under section 409A (TD 9321, 72 FR 19234).

Written or electronic comments must be received by October 31, 2016. Outlines of topics to be discussed at the public hearing scheduled for November 30, 2016 must be received by October 31, 2016.

26 CFR Parts 1 and 301

Summary

This document contains proposed regulations that revise the rules for reporting qualified tuition and related expenses under section 6050S on a Form 1098-T, “Tuition Statement,” and conforms the regulations to the changes made to section 6050S by the Protecting Americans from Tax Hikes Act of 2015. This document also seeks to amend the regulations on the education tax credits under section 25A generally as well as to conform the regulations to changes made to section 25A by the Trade Preferences Extension Act of 2015 and the Protecting Americans from Tax Hikes Act of 2015. The proposed regulations affect certain higher educational institutions required to file Form 1098-T and taxpayers eligible to claim an education tax credit. This document also provides notice of a public hearing on these proposed regulations.

Written or electronic comments and requests for a public hearing must be received by October 3, 2016.

26 CFR Parts 1 and 301

Summary

This document contains proposed regulations relating to information reporting of minimum essential coverage under section 6055 of the Internal Revenue Code (Code). Health insurance issuers, certain employers, and others that provide minimum essential coverage to individuals must report to the IRS information about the type and period of coverage and furnish related statements to covered individuals. These proposed regulations affect health insurance issuers, employers, governments, and other persons that provide minimum essential coverage to individuals.

2016-07-26; vol. 81 # 143 - Tuesday, July 26, 2016

81 FR 48707 - Property Transferred in Connection With the Performance of Services

Effective Date: These regulations are effective on July 26, 2016. Applicability Date: For dates of applicability, see § 1.83-2(g).

26 CFR Part 1

Summary

This document contains final regulations relating to property transferred in connection with the performance of services. These final regulations affect certain taxpayers who receive property transferred in connection with the performance of services and make an election to include the value of substantially nonvested property in income in the year of transfer.

Effective Date: These regulations are effective on July 22, 2016. Applicability Date: For date of applicability, see § 1.50-1T(f).

26 CFR Part 1

Summary

This document contains temporary regulations that provide guidance regarding the income inclusion rules under section 50(d)(5) of the Internal Revenue Code (Code) that are applicable to a lessee of investment credit property when a lessor of such property elects to treat the lessee as having acquired the property. These temporary regulations also provide rules to coordinate the section 50(a) recapture rules with the section 50(d)(5) income inclusion rules. In addition, these temporary regulations provide rules regarding income inclusion upon a lease termination, lease disposition by a lessee, or disposition of a partner's or S corporation shareholder's entire interest in a lessee partnership or S corporation outside of the recapture period. Accordingly, these regulations will affect lessees of investment credit property when the lessor of such property makes an election to treat the lessee as having acquired the property and an investment credit is determined under section 46 with respect to such lessee. The text of these temporary regulations also serves as the text of the proposed regulations set forth in the Proposed Rules section in this issue of the Federal Register .

Withdrawal of notice of proposed rulemaking; and notice of proposed rulemaking by cross-reference to temporary regulations.

Written or electronic comments and requests for a public hearing must be received by October 20, 2016.

26 CFR Part 1

Summary

This document withdraws the notice of proposed rulemaking published in the Federal Register on December 20, 1985, and the notice of proposed rulemaking published in the Federal Register on September 21, 1987. In the Rules and Regulations section of this issue of the Federal Register, the Treasury Department and the IRS are issuing temporary regulations relating to the income inclusion rules under section 50(d)(5) of the Internal Revenue Code (Code) that are applicable to a lessee of investment credit property when a lessor of such property elects to treat the lessee as having acquired the property. The text of those regulations also serves as the text of these proposed regulations.

Effective Date: These final regulations are effective on July 18, 2016. Applicability Date: For dates of applicability, see §§ 1.141-15, 1.148-11, 1.150-1(a)(2)(iii), and 1.150-2(j).

26 CFR Part 1

Summary

This document contains final regulations on the arbitrage restrictions under section 148 of the Internal Revenue Code (Code) applicable to tax-exempt bonds and other tax-advantaged bonds issued by State and local governments. These final regulations amend existing regulations to address certain market developments, simplify certain provisions, address certain technical issues, and make existing regulations more administrable. These final regulations affect State and local governments that issue tax-exempt and other tax-advantaged bonds.

Written or electronic comments and requests for a public hearing must be received by October 13, 2016.

26 CFR Part 1

Summary

This document contains proposed regulations under section 355 of the Internal Revenue Code (Code). The proposed regulations would clarify the application of the device prohibition and the active business requirement of section 355. The proposed regulations would affect corporations that distribute the stock of controlled corporations, their shareholders, and their security holders.

2016-07-12; vol. 81 # 133 - Tuesday, July 12, 2016

81 FR 45008 - Requirement To Notify the IRS of Intent To Operate as a Section 501(c)(4) Organization; Final and Temporary Regulations

Effective Date: These regulations are effective on July 8, 2016. Applicability Date: For date of applicability, see § 1.506-1T(f).

26 CFR Parts 1 and 602

Summary

This document contains final and temporary regulations relating to the requirement, added by the Protecting Americans from Tax Hikes Act of 2015, that organizations must notify the IRS of their intent to operate under section 501(c)(4) of the Internal Revenue Code (Code). The regulations affect organizations described in section 501(c)(4) (section 501(c)(4) organizations) that are organized after December 18, 2015, and certain section 501(c)(4) organizations existing on that date. The text of the temporary regulations serves as the text of the proposed regulations set forth in the related notice of proposed rulemaking (REG-101689-16) published in the Proposed Rules section in this issue of the Federal Register .